invisible contract
——————————————————————
For many years, I have posted the following in another file on my website:
—————————————————————–http://home.hiwaay.net/%7Ebecraft/ssn.html
_____________________________________________SOCIAL SECURITY IS NOT A CONTRACT
………………………………………………..
Art. 1, § 9, cl. 7

NOONAN, Circuit Judge:
………………………………………………..
Phillip Marsh and his five co-defendants appeal their convictions of conspiring to defraud the United States by impeding the collection of federal income taxes and their convictions of related crimes
………………………………………………..
They also appeal their sentences, which, as to Phillip Marsh total a term of imprisonment of 17 1/2 years, as to his wife Marlene a term of 14 years, and as to the other defendants lesser but still substantial periods of prison
………………………………………………..
FACTS AND PROCEEDINGS
………………………………………………..
Phillip Marsh was the founder in 1990 of

The Pilot Connection Society,

often self-identified by its acronym

TPCS
………………………………………………..
Marsh’s enterprise offered its customers the elusive and enchanting prospect of

untaxing themselves
………………………………………………..
The verb

“untax”

entered the language in

political conflict

in

England

over a

formidable tariff

on

foreign grain

and denoted

political action

by the

government
………………………………………………..
(“Who will untax our bread?”

E. Elliott,

Corn-Law Rhymes,

1833)
………………………………………………..
“Untax,”

as used in the present context,

means

freeing oneself from any legal obligation

to pay any

income tax,

federal

or

state
………………………………………………..
To achieve this exceptional state,

TPCS

offered an

“Untax Package”
………………………………………………..
The package

included

Phillip Marsh’s

The Compleat Patriot,

the Constitution of the United States,

Psalm 91,

and

a photograph of Phillip and his wife suitable for framing
………………………………………………..
It also included

“Very basic untax documents and their instructions”
………………………………………………..
Among them were a form letter to be sent to the

District Director of the Internal Revenue Service

stating that the quondam taxpayer had recently found out that the director had been

“attempting to extort money”

from him and demanding that he

justify his jurisdiction

by a

certified copy

of the

director’s designation of authority

from the

Secretary of the Treasury
………………………………………………..
The letter was not to be xeroxed and was to be handwritten because
………………………………………………..
“[i]t takes 3 to 5 times as long to read hand written material as it does to read typed material — anything to slow the IRS down!”
………………………………………………..
Another form letter, to be similarly copied by hand, informed the

the district director

that the

taxpayer

was not a person

under the

director’s jurisdiction
………………………………………………..
The Untax Package

included

another form by which the

taxpayer

revoked

income tax returns

previously signed by him

and

“cancelled”

his signature

on such returns
………………………………………………..
This form was to be retyped by the

taxpayer,

eliminating the

Pilot Connection letterhead,

and to be notarized
………………………………………………..
The

theory

of the

revocation

and

cancellation,

as explained in the

Untax Package,

was that the

IRS

would use

earlier returns

to prove

that the

taxpayer

was aware

of

his obligation

to

file

and

pay
………………………………………………..
The

revocation

and

cancellation

would, so the

Untax Package

suggested,

eliminate this easy evidence of the

taxpayer’s willfulness

in now refusing to file and pay
………………………………………………..
The reason that the

taxpayer

could so readily remove himself from the

taxpaying rolls

was, according to

TPCS,

that

“income tax is voluntary”
………………………………………………..
(SER 32)

If you didn’t want to pay it,

you didn’t have to
………………………………………………..
TPCS

also advised its members

to resort to

“alternative banking,”

that is,

to pay everything by

cash

or

postal money order,

or

to join something called the

National Commodity and Barter Association

and use

“warehouse banking,”

or to have some trusted associate open an account for one in the associate’s name, or to establish, with TPCS’s help, an

“offshore trust”
………………………………………………..
The reason for adopting one of these

alternative styles

of

money management

was that if you

opened a checking or savings account

you agreed

“that the money belongs to the bank from that moment on,”

with the implication that the

bank

would surrender the money

on levy

by the

IRS

(SER 36)
………………………………………………..
Members

were provided with

forms,

to be

recopied

and

notarized,

of

revocation

of

bank signature cards

(SER 35)
………………………………………………..
Another practical precaution the

TPCS member

was advised to take, in order to assure that

his emancipation

from

taxation

was effective,

was to

file W-4s

with his employers

claiming as many exemptions

as he had thousands of dollars of

income
………………………………………………..
For example,

if he earned $30,000,

he was to

file a W-4

claiming 30 exemptions
………………………………………………..
The member was assured by

TPCS

that there was

no limit

to the number of exemptions

he could lawfully claim

(SER 342)
………………………………………………..
No mention was made of

any duty

to have a reason

for

claiming an exemption
………………………………………………..
Untax Packages,

the contents sometimes different in unessential detail,

were sold by

TPCS

for a price that varied for the occasion
………………………………………………..
At the start the price was over $6,000.

but who did pay $45 for membership
………………………………………………..
By the end of 1993 there were 12,617 in this category

(SER 19)
………………………………………………..
They received

TPCS’s magazine,

The Connector
………………………………………………..
The magazine carried the subtitle

“The Voice of Freedom”

and ran a facsimile of an

American flag

as its logo
………………………………………………..
Its pages repeated at their foot the mantra of the Society,

“Income Tax Is Voluntary!”
………………………………………………..
The Connector

informed its readers that there was

no law

making anyone liable

for

income tax
………………………………………………..
TPCS

had a cadre superior to that of mere members, constituted by those admitted to the status of

Associate Member
………………………………………………..
An

Associate Member

had the right

to sell the publications

of

TPCS
………………………………………………..
He paid

$10,000

to acquire the franchise and the

confidential instructions

on marketing that accompanied the franchise
………………………………………………..
By

December 31, 1993,

there were

730 persons

who had been admitted to this

advanced status
………………………………………………..
Apparently some associates got a discount, for the total paid by them recorded in the Society’s book was

$5,281,010.

(SER 19)
………………………………………………..
Phillip Marsh

conceived the idea of

TPCS
………………………………………………..
His wife Marlene joined him in marketing it
………………………………………………..
Together they traveled the

United States

soliciting the purchase of memberships and

Untax Packages

and speaking at

seminars

and

conferences

intended to promote

TPCS
………………………………………………..
Marlene’s daughter,

Jill Spencer,

was an

Associate Member

and the

office manager,

in the latter capacity opening and distributing mail sent to

TPCS,

logging cash received and responding to some customer complaints
………………………………………………..
Her husband

Darrell

was also an

Associate Member
………………………………………………..
He became

TPCS’s

General Manager,

overseeing staff and publications,

revising the

Untax Package,

and writing in his own name in

The Connector,

to explain why paying

income tax

was optional
………………………………………………..
A family operation,

TPCS

was aided by

Joseph Coltrane, alias John Campion,

and by

Douglas Carpa
………………………………………………..
Coltrane

was the

National Coordinator

of the

TPCS sales force
………………………………………………..
Carpa

was not a TPCS member

but from approximately

May 1991

to

June 1992

assisted the marketing of memberships in

TPCS

by putting together trusts in which

TPCS members

might hope to hide their assets from the

IRS
………………………………………………..
He offered his drafts of

trust instruments

only to those who purchased the

Untax Package
………………………………………………..
He assured

members

that

his trusts

were

“old and cold”

and would work to cure even pre-existing problems with the

IRS

because the

trusts

would be predated to a time

before an

IRS lien
………………………………………………..
In its publications

TPCS

asserted that it was

not a tax protester movement,

that it

did not deny the constitutionality

of the

Internal Revenue Code,

and that

it did not maintain

that

Congress lacked the power

to

tax income
………………………………………………..
TPCS

simply taught that

Congress

had not exerted that power

and that the

IRS

was

“a private corporation”

engaged in lawless efforts to extract money from Americans not obliged to pay
………………………………………………..
TPCS

characterized its own teachings as

educational

and added that they were the

exercise of free speech,

protected by the

First Amendment

from prosecution
………………………………………………..
TPCS

was aware that the

IRS

challenged its view of the law,

an awareness reinforced by the rejection that

TPCS’s Untax Package

received when put into practice by members
………………………………………………..
The

IRS

by

1991

was aware of

TPCS

and alert to its raison d’etre
………………………………………………..
In

February 1992

an

affidavit

filed by

IRS Special Agent Diane Messer

characterized

TPCS

as an

“illegal tax protester organization”

and sought a

search warrant

authorizing the seizure of documents pertaining to

TPCS

and to

Phillip and Marlene Marsh
………………………………………………..
The search was to be carried out at the Marshes’ home, which they used as the Society’s headquarters
………………………………………………..
Pursuant to the

warrant,

a comprehensive seizure

was made of the

correspondence,

computers,

and

file cabinets

of the

Society
………………………………………………..
Apparently as a response to the search, on

August 12, 1992,

in

Stockton, California,

Phillip and Marlene Marsh

and

Jill Spencer

signed two papers

alleging

that

certain persons

were

indebted to them

in the amount of

$350,000 each and seeking to place a

commercial lien

on the

property

of the

debtors
………………………………………………..
These persons were

Agent Messer

and

three other IRS agents

involved in the search;

the

United States Magistrates

who had authorized the search;

three United States attorneys

in the

Eastern District of California

and

one United States attorney

in the

Northern District;

Lawrence Karlton,

Senior District Judge

of the

Eastern District;

and

California Superior Court Judge

Jeremy Fogel
………………………………………………..
The liens were filed in

Nevada

and

Washington
………………………………………………..
A year later, in

February 1993,

a

second affidavit

executed by

Agent Messer

asserted that

TPCS

was

“so permeated with involvement with illegal activities”

that a comprehensive search could not separate the few innocent items

“from the vast amount of material which will be relevant evidence of the criminal violations”
………………………………………………..
The Marshes then moved from

California

to

Colorado

and from their home there continued their enterprise under the name the

Liberty Foundation
………………………………………………..
A

third affidavit

executed by

Messer

led to the

comprehensive search

of the

Colorado office

in

December 1993
………………………………………………..
A

grand jury

had already, on

November 29, 1993,

indicted the defendants for

conspiracy to defraud the United States
………………………………………………..
The defendants moved unsuccessfully to suppress the material seized by the government from their files
………………………………………………..
Phillip Marsh

sought with equal unsuccess to introduce a report by a psychiatrist who evaluated him and found him to suffer from delusions; the psychiatrist’s proffered testimony was excluded in limine on the government’s motion
………………………………………………..
Trial followed in the district court for Northern California running slightly over three months, from

August 29, 1994

to

November 30, 1994
………………………………………………..
The jury was unable to agree on the principal counts
………………………………………………..
The

United States

obtained a

superseding indictment

charging all six defendants

with

conspiracy to defraud

the

United States

by

obstructing the lawful functions

of the

IRS,

in particular by their operation and promotion of

TPCS

and the

Untax Package
………………………………………………..
The two Marshes and the two Spencers were personally charged with

tax evasion

and

failure to file a return
………………………………………………..
The indictment also charged all defendants except Carpa with numerous counts of

mail fraud

in the sale of the

Untax Package

to over 3,000 persons
………………………………………………..
The two Marshes and Jill Spencer were charged with

endeavoring to impede the administration of the tax laws

by filing the

commercial liens

in

Nevada

and

Washington

against the

government officials

named in them
………………………………………………..
The

government

announced in its

Status Conference Statement

that it intended to introduce

“as much of its evidence as possible through `summary witnesses'”
………………………………………………..
The defendants filed a

joint motion in limine

opposing this procedure:

“it appears that the government intends to avoid cross-examination of the alleged mail fraud victims by hearsay summaries”
………………………………………………..
The

government

had proposed that

IRS agents

read excerpts from the

TPCS files
………………………………………………..
The defendants objected that the material from

TPCS files — complaint letters from persons saying that they had been deceived by TPCS — fell within no exception to the hearsay rule
………………………………………………..
The defendants asserted that the procedure would violate their

“Agent Durrette would be the screen between the defendants and their alleged victims”
………………………………………………..
A hearing was held the following week before the judge who had presided at the first trial in order to schedule the time allowed for trial
………………………………………………..
The court expressed dissatisfaction with the amount of time

“wasted”

by both sides in the first trial
………………………………………………..
The court stated that the jury had heard the details of the untaxing scheme

“ad nauseam.”
………………………………………………..
The government argued that the first jury had been

“affected by the government’s inability to present the case in a way that educated them as to what our theory of the case was, what our evidence meant, during the presentation of the evidence.”
………………………………………………..
The court asked,

“What stopped you?”
………………………………………………..
The government replied that the court had stopped it from having a witness read from the material seized in the searches
………………………………………………..
The government went on to say that it had to prove the defendants’ state of mind as to both the mail fraud counts and the tax evasion counts
………………………………………………..
The court:

“It seems to me that is proved by the quality of the evidence as opposed to the quantity of the evidence.”
………………………………………………..
The court went on to say:

“I thought the victims were a disaster for the government . . . .

[T]he victims were particularly unsympathetic

They were people who were already in serious trouble with the Internal Revenue Service, were essentially tax cheats themselves; and were put on the witness stand with the representation that they were somehow victimized by the defendants . . . . And I’m convinced that your case ran aground with that first group of witnesses.”
………………………………………………..
The district court never formally ruled on the defendants’ in limine motion to exclude the complaint letters; the government concluded that it had a green light
………………………………………………..
On

November 9,

the government offered

Agent Durrette

to summarize material taken from the files of TPCS
………………………………………………..
The defendants stipulated that the material came from the files — the government would not have to prove where each piece of correspondence came from
………………………………………………..
The court described the stipulation
………………………………………………..
It was

“that these TPCS client file documents would simply be stipulated as to their admission into evidence without the necessity of putting a witness on the stand to lay any foundation as to these documents

And the stipulation would be that these documents were found in one or the other of the facilities associated with the Pilot Connection Society.”
………………………………………………..
The government answered, “Yes.”
………………………………………………..
Agreeing, the defendants again vigorously objected to the government’s presentation of the files through testimony about their contents by Durrette
………………………………………………..
The government replied that proof of the defendants’ state of mind was

“the heart and soul”

of its case
………………………………………………..
Durrette took the stand
………………………………………………..
The government had prepared an extensive file of material taken from TPCS with duplicates of a number of letters to be given as handouts to the jury
………………………………………………..
The material consisted substantially in statements of government officials as to what the income tax law was, statements of other persons including officers of the Church of Jesus Christ of Latter Day Saints on the obligation to pay income taxes, and letters from purchasers of the Untax Package complaining that the Package did not work or, worse, that they had been fraudulently induced to buy it
………………………………………………..
The defendants objected repeatedly to the procedure — to Durrette’s reading of views on the law as argument by the government, to Durrette’s reading of selected passages from the correspondence as not summarizing but highlighting, and to the reading of the complaints as violative of the Confrontation Clause
………………………………………………..
Every objection was overruled by the trial court
………………………………………………..
The second trial was two months shorter than the first
………………………………………………..
On

in the collection of income taxes
………………………………………………..
Phillip and Marlene Marsh and Jill Spencer were convicted of two counts of violation of

26 U.S.C. § 7212(a)
——————————————————————http://www.law.cornell.edu/uscode/text/26/7212
_________________________________________________
by corruptly endeavoring to obstruct the administration of the income tax laws by filing the liens
………………………………………………..
Both the Marshes and both the Spencers were convicted of violating

26 U.S.C. § 7203
——————————————————————http://www.law.cornell.edu/uscode/text/26/7203
_________________________________________________
by failing to file tax returns
………………………………………………..
Both Marshes were acquitted of ten counts of mail fraud and convicted of ten counts of mail fraud in violation of

including motions by the Marshes and Jill Spencer to dismiss the obstruction charges on the ground of lack of venue
………………………………………………..
On

June 26, 1996

the court pronounced sentence
………………………………………………..
Phillip Marsh was sentenced to 5 years imprisonment for conspiracy to defraud the United States; 5 years imprisonment for each of his ten mail fraud convictions; 5 years imprisonment on each of two convictions of tax evasion; 3 years imprisonment for each his two endeavors to impede the administration of the tax laws; and 1 year imprisonment for each conviction of willful failure to file tax returns
………………………………………………..
The sentences for conspiracy, tax evasion and 9 of the 10 mail fraud counts were to be served concurrently with each other
………………………………………………..
The 3 year sentences for the endeavor to impede were to be were to be served consecutively to the other counts and to each other
………………………………………………..
The 1 year sentences for the two failures to file counts served consecutively to each other and the other counts
………………………………………………..
The sentence on the two tax evasion counts and two failure to file counts totals 7 years
………………………………………………..
The 5 year sentence for the tenth mail fraud charge was to be served consecutively to the extent necessary to produce a total sentence of 17 1/2 years
………………………………………………..
Marlene Marsh was sentenced to 5 years imprisonment for conspiracy to defraud the United States; 5 years each for the 10 mail fraud counts, 5 years each for the two tax evasion counts, 3 years on each of the 2 counts of endeavor to impede, 1 year on each of the 2 convictions of willful failure to file
………………………………………………..
The 3 year sentences for endeavor to impede were to be served concurrently with each other and consecutively to the other sentences, the 1 year sentences for failure to file were to be served consecutively to each other and to the other sentences, and the 5 years for the two tax evasion counts and 10 mail counts were to be served concurrently to each other and consecutively to the other sentences to the extent necessary to produce a total sentence of 14 years
………………………………………………..
The sentence on the two tax evasion counts and two failure to file counts totals 7 years
………………………………………………..
Darrell Spencer was sentenced to 5 years imprisonment for conspiracy to defraud the United States, 5 years on each of 9 mail fraud convictions, 5 years on each of 2 tax evasion convictions, and 1 year on each of 2 failure to file convictions
………………………………………………..
The sentence for conspiracy, the 2 tax evasion sentences, and 8 of the 9 mail fraud sentences were to be served concurrently, as were the sentences for failure to file
………………………………………………..
The sentence on the two tax evasion counts and two failure to file counts totals 5 years
………………………………………………..
The ninth mail fraud sentence was to be served consecutively to the other sentences to the extent necessary to produce a total of 7 1/4 years
………………………………………………..
Jill Spencer was sentenced to 5 years of imprisonment for conspiracy to defraud the United States, 5 years on each of 9 mail fraud convictions, 5 years on each of 2 tax evasion convictions, 1 year on each of 2 failure to file convictions, and 3 years on each of 2 convictions to impede
………………………………………………..
The sentences for conspiracy, tax evasion and the 9 mail fraud counts were to be served concurrently, as were the sentences for failure to file
………………………………………………..
The sentence on the two tax evasion counts and the two failure to file counts totals 5 years
………………………………………………..
The two 3 year sentences for corrupt endeavor to impede were to be served concurrently to each other but consecutively to the other sentences to the extent necessary to produce a total sentence of 7 1/4 years
………………………………………………..
Coltrane was sentenced to 5 years for a conspiracy to defraud the United States and 1/4 year imprisonment on one count of mail fraud, the sentences on the other counts of mail fraud to be served concurrently
………………………………………………..
Carpa was sentenced to 4 3/4 years on conviction of conspiracy to defraud the United States
………………………………………………..
The defendants appeal
………………………………………………..ANALYSIS
………………………………………………..
All defendants contend that they were denied the right to confront the witnesses against them when Agent Durrette read to the jury excerpts from material found in the defendants’ files
………………………………………………..
The following are from the excerpts read aloud to the jury by Agent Durrette:

(The excerpts are exact, but not given in full; the authorships and dates are as read)
………………………………………………..
1. “Some

so-called tax protesters

are

making speeches

and

offering seminars

around the country

at which

serious misrepresentations

about the

tax laws

are

being presented

to the

public

as

fact”

Fact Sheet
………………………………………………..
2. “Indeed, it is strange how the mind justifies things